A new Reaganomics is taking hold in Europe, with grave implications for progressive politics everywhere.

April 19, 2007

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“The American model” plays a big role in European domestic economic debates, with business school types convinced that the streets really are paved with gold in the land of Ronald Reagan, and the left certain that modern America is a kind of Dickensian inferno. The leading candidates in France’s presidential election (held, in two rounds, on April 22 and May 6) have followed this pattern in their rhetoric, with conservative Nicolas Sarkozy and Socialist Ségolène Royal respectively praising and criticizing the US economy.

At other times in history, however, these roles were reversed. During the American Civil War, French liberals supported the Union, while monarchists around Europe were drooling at the possible demise of the American experiment. Civil War historian James McPherson, in an essay on European responses to the conflict, quotes French reformer Edgar Quinet’s 1862 statement that Napoleon III wanted to “destroy democracy in the United States…because in order for Napoleonic ideas to succeed, it is absolutely indispensable that this vast republic disappear from the face of the earth.”

Today, the transatlantic discussion is not about “Napoleonic ideas” but rather about the viability of the welfare state in an era of globalization. And just as European republicans of the nineteenth century depended on the success of the American experiment in democracy, so today American progressives would be enormously helped if Europe can get social justice and globalization right. Thus, while the French are debating the American model, Americans should be taking a look at what’s happening to the French one.

It’s all too easy to see Europe as a kind of welfare-state Alamo, desperately trying to hold on to the gains workers and the middle class made during the twentieth century. European leaders’ rhetoric justifies that impression. However, the reality is much more complicated. As columnist Jean-Louis Andreani argued recently in Le Monde, EU governments, “including that of France, are supporting, or at least permitting, a policy that resists on principle anything that’s public in favor of whatever is private. But this ideological shift is never admitted–or submitted to a clear decision by voters.” It’s like a Reagan revolution without a Reagan.

Nicolas Sarkozy is not a European Reagan, but some of his plans seem drawn from the Republican playbook. He proposes, for instance, a cut in the estate tax and the abolition of a surcharge on large fortunes. He also proposes other tax cuts, which he promises will put more money in the average person’s pocket–paid for in part by not replacing half of all retiring civil service workers. You can almost hear him saying, “It’s not the government’s money–it’s your money!” In addition, the at-will employment system the government tried to begin installing last year (but had to retract in the face of public protest) remains a centerpiece of Sarkozy’s program. This is all part of his stated goal of bringing what he describes approvingly as Anglo-Saxon flexibility to France, a project that makes him the darling of the business associations even as his law-and-order image allows him simultaneously to cull votes from the populist far right.

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And where is the fearsome French left in all this? It’s not exactly AWOL, but neither is it providing a robust challenge to the current rightward drift. Ségolène Royal is running on a platform that is more Clinton than Roosevelt. She proposes some spending increases, but by far the biggest items on her wish list are for Blairite, New Economy-type programs such as more support for scientific research and improvements in training and education to help French workers compete in a globalized economy. But she says nary a word about the trade and financial flows that cause these workers to need help in the first place.

The only parts of the Socialist program that try to address these problems are proposals to give tax credits to companies that reinvest profits in France and to make companies reimburse the government for tax breaks if they turn around and send abroad the jobs the tax breaks were designed to subsidize. Royal’s program also calls for raising the minimum wage and increasing pension benefits for the lowest-income retirees. But all these proposals are well within what most Democrats in the United States and even some Republicans could support.

These timid suggestions come at a time when French voters are obsessed with economic insecurity, and many hallmarks of the French model seem to be crumbling. For instance, even the paid vacation, the most emblematic achievement of Léon Blum’s Popular Front government of the 1930s, is no longer what it once was. In 2004 one-third of French people didn’t take any vacation, largely for financial or work reasons, according to a report released last summer by the nation’s statistical agency.

Sarkozy has said that he profits from this “absence of economic questions,” but the Socialists have also lost voters to François Bayrou, a conservative trying to ply the middle ground, who has surprisingly strong support. Bayrou has tried to distance himself from Sarkozy by warning that the United States is “not a model.” But he doesn’t propose any major new initiatives that might actually shore up the French model he says he prefers.

If none of this seems to matter to the fate of progressive politics in the United States, consider this: If a kind of Reaganomics came to dominate Europe, there would no longer be any major Western economy to demonstrate the viability of the social market. An ever-growing list of health, pension and education “reforms”–all tending in the direction of greater inequality–would eviscerate Europe’s societal model. The welfare-state Alamo would fall, and American progressives would lose a powerful, living argument that–for all its flaws–still gives the lie to the Bush/Norquist vision of the so-called “ownership society.” Something to think about as French voters go to the polls.

Jordan StancilJordan Stancil is a lecturer in the Graduate School of Public and International Affairs of the University of Ottawa.